TESLA DE­LIV­ERY TEAM FIRED IN RE­CENT JOB CUTS

Business Standard - - FRONT PAGE - ALEXAN­DRIA SAGE

When Tesla Inc an­nounced last month a sec­ond round of job cuts to rein in costs, one cru­cial depart­ment was par­tic­u­larly badly hit. The au­tomaker more than halved the di­vi­sion that de­liv­ers its elec­tric ve­hi­cles to North Amer­i­can cus­tomers, two of the laid-off work­ers said.

Some 150 em­ploy­ees out of a team of about 230 were let go in Jan­uary at the Las Ve­gas fa­cil­ity that gets tens of thou­sands of Model 3s into the hands of U.S. and Cana­dian buy­ers, they said, in a sign the com­pany ex­pected the pace of de­liv­er­ies to sig­nif­i­cantly slow in the near term.

The cuts, which have not been pre­vi­ously re­ported, could fuel in­vestor wor­ries that de­mand for the Model 3 in the United States has tailed off af­ter a large tax break for con­sumers ex­pired last year and the car re­mains too ex­pen­sive for most con­sumers.

Tesla has said its fo­cus this quar­ter is on sup­ply­ing cars to cus­tomers wait­ing in China and Europe.

“There are not enough de­liv­er­ies,” one of the for­mer em­ploy­ees told Reuters. “You don’t need a team be­cause there are not that many cars com­ing through.”

De­liv­ery of the Model 3 was the com­pany’s key pri­or­ity in the lat­ter half of 2018, as Tesla tried to sup­ply all buy­ers want­ing the full ben­e­fit of the $7,500 U.S. tax credit be­fore it was cut in half at year’s end.

The Model 3 is cru­cial to Tesla’s plans for long-term prof­itabil­ity. The com­pany aims to post a profit in each quar­ter this year, based on the ex­pec­ta­tion that it will sell more Model 3s and con­tinue to cut costs.

Tesla de­clined to com­ment on the job re­duc­tions in the de­liv­ery team. The com­pany still has an undis­closed num­ber of de­liv­ery per­son­nel at­tached to other lo­ca­tions.

Even be­fore the par­ing back of the de­liv­ery team, in­vestors ques­tioned the level of de­mand for the Model 3 re­main­ing af­ter Tesla’s all-out push to sup­ply buy­ers ahead of the tax credit cut.

“Given the need for rev­enue to cover costs and gen­er­ate cash, the fi­nan­cial com­mu­nity should be fo­cused on the level of de­mand for Tesla ve­hi­cles – in par­tic­u­lar the Model 3,” wrote Bar­clays an­a­lyst Brian John­son in Jan­uary.

The two for­mer de­liv­ery work­ers said the 2018 sales push has left Tesla’s reser­va­tions list plucked clean of North Amer­i­can buy­ers will­ing to pay cur­rent prices of over $40,000 to get their hands on a Model 3.

Some 150 em­ploy­ees out of a team of about 230 were let go in Jan­uary at the Las Ve­gas fa­cil­ity that gets tens of thou­sands of Model 3s into the hands of US and Cana­dian buy­ers

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